Australia has its first female prime minister, British-born Julia Gillard, this morning, after Kevin Rudd stood down before a leadership ballot could be held.

Rudd had been expected to lose today's planned ballot, amid predictions of defeat for the ruling Labor party in an election scheduled for October.

Although he scored a landslide election victory against an 11-year-old Liberal government led by John Howard in November 2007, he had said he was confident he would win the challenge. But commentators were already writing him off. "He's a goner. You can stick a fork in him," Nick Economou of Monash University told Reuters.

For Rudd, the transformation in his political fortunes has been startling. Only six months ago, with the opposition going through its third leadership change since he beat Howard, Rudd and his government seemed untouchable.

A year ago he rivalled Bob Hawke as Australia's most popular prime minister. Now he will join Hawke as the only other Labor prime minister to be dumped by his party, making him the first one-term prime minister since 1932.

Putting on a brave front, Rudd told a news conference yesterday that he was proud of his achievements, such as signing the Kyoto protocol on climate change, apologising to disadvantaged Aborigines and steering Australia through the global financial crisis. He blamed factional powerbrokers within Labor for plotting against him and vowed to fight.

Gillard is expected to present more of a change of leadership style than substance, but investors hope she will soften the government's controversial "super profits" mining tax, which is threatening $20 billion worth of investment and has rattled voters.

The tax had faced vociferous opposition from big firms such as BHP Billiton and Rio Tinto, who conducted a multimillion dollar advertising campaign against the plan, and voters are worried it would damage the Australian economy and risk jobs.

Gillard was said to have been reluctant to challenge Rudd, until the Sydney Morning Herald reported this week that the prime minister had used his chief of staff, Alister Jordan, to sound out backbench MPs on their support. This followed a poll which indicated that Labor was facing electoral defeat.

"There's no way Kevin will walk. The bloke's wanted the fucking job for 10 years,'' one powerbroker had earlier told the Herald. "Howard had it for 11 years and they couldn't get rid of him.''

Rudd's support had been ebbing after a series of political reversals this year. In April, he shelved his main climate policy involving a carbon trading scheme, a key platform for his election victory three years ago. Rudd backtracked because he lacked the votes in the senate, so the scheme has been postponed until 2011.

Julia Gillard profile

Julia Gillard, 48, was born in Wales then her family migrated to Australia when she was four. She studied law and was a partner in a firm that specialises in class actions and personal injury cases before working as a political adviser. She was first elected to parliament in 1998. One conservative lawmaker claimed she would be unfit to govern because she was unmarried and had no children, although he later apologised for the comment. Gillard, the deputy prime minister, is busy with a wide-ranging ministerial portfolio: it includes employment and workplace relations, education and social inclusion. She has been acting PM for more than 130 days, while Rudd has been overseas. Reuters